At the beginning of 2015,Elixir Inc.has the following ledger balances: During the year,credit sales amounted to $800,000.Cash collected on credit sales amounted to $760,000 and $18,000 has been written off.At the end of the year,company adjusted for bad debts expense using the aging method.The amount estimated as uncollectible was $25,000.
-The ending balance in the Allowance for Bad Debts would be ________.

Question

At the beginning of 2015,Elixir Inc.has the following ledger balances:  During the year,credit sales amounted to $800,000.Cash collected on credit sales amounted to $760,000 and $18,000 has been written off.At the end of the year,company adjusted for bad debts expense using the aging method.The amount estimated as uncollectible was $25,000.
-The ending balance in the Allowance for Bad Debts would be ________.

Quizplus · Accepted Answer

To calculate the ending balance in the Allowance for Bad Debts, we need to use the aging method. Let's break down the information given: 
- Credit sales = $800,000 
- Cash collected on credit sales = $760,000 
- Accounts written off = $18,000 
- Estimated uncollectible amount = $25,000

To use the aging method, we need to determine what percentage of the outstanding accounts receivable are likely to be uncollectible. We do this by grouping the outstanding receivables by age and determining the historical percentage of receivables that were uncollectible in each age group.

Assuming that the aging analysis results in an estimated allowance of $25,000, the ending balance in the Allowance for Bad Debts would be $25,000. Therefore, the correct answer is (C).

At the Beginning of 2015,Elixir Inc